Question 1

Use the following to answer questions : 
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.In autarky,Jackson produces and consumes 30 head of cattle and 80 kilograms of wheat,while Tahoe produces and consumes 80 head of cattle and 60 kilograms of wheat._____ has a(n)_____ advantage in the production of _____.

Accepted Answer

The answer of Use the following to answer questions :...

Question 2

Chile has a comparative advantage over Canada in copper.Which factor is a source of this comparative advantage?

Accepted Answer

Chile has large deposits of copper ore which gives it a comparative advantage over Canada in copper production.

Question 3

Japan's comparative advantage in automobiles can be attributed to:

Accepted Answer

The answer of Japan's comparative advantage in automobiles can be...

Question 4

Which model states that nations that are abundant in a factor will have a comparative advantage in a good whose production is intensive in that factor?

Accepted Answer

The Heckscher-Ohlin model states that countries will have a comparative advantage in producing goods that use the factors of production they have in abundance. This theory predicts that countries with an abundance of, for example, capital, will produce goods that are more capital-intensive, and those with an abundance of labor will produce goods that are more labor-intensive.

Question 5

If the _____ differ(s)between two countries,this suggests the possibility for mutually advantageous trade.

Accepted Answer

Factor endowments refer to the different resources and skills that each country possesses, such as natural resources, labor force, and technological capabilities. If two countries have different factor endowments, they can specialize in producing goods or services using their abundant resources and trade with each other to benefit from the other country's abundant resources. This can lead to mutually advantageous trade. Currency, exchange rate, and level of government spending for defense may also have an impact on trade, but they are not directly related to the concept of factor endowments.

Question 6

Bangladesh exports shirts,the making of which is labour-intensive,to Canada.The likely source of Bangladesh's comparative advantage in shirts is:

Accepted Answer

Comparative advantage arises from differences in factor endowments between countries. In this case, Bangladesh has a comparative advantage in producing shirts because it is a labour-abundant country (choice C). This means that labour is relatively more plentiful and therefore cheaper in Bangladesh than in Canada. This allows Bangladesh to produce shirts at a lower cost and thus export them to Canada competitively. The other choices are not plausible explanations for Bangladesh's comparative advantage in shirts.

Question 7

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Possibilities for the United States and Canada }\
\begin{array} { l c c } 
\hline \text { U.S. Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 10 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 10 \
\hline \text { Canada Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 2 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 12 \
\hline
\end{array}
\end{array}$$
-(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada.Both nations can produce cars and lumber.If these nations were to specialize and trade,the United States would benefit from trade by exporting 1 million cars to Canada in exchange for _____ million board feet of lumber.

Accepted Answer

The answer of Use the following to answer questions :...

Question 8

Which trade pattern is BEST explained by increasing returns?

Accepted Answer

Increasing returns occur when a firm produces more, costs of production decrease, causing it to produce even more, further decreasing costs. This leads to a concentration of production in a few countries that have established a foothold in the industry. This trade pattern is seen in the case of Japan exporting cars to Canada, as the Japanese auto industry has established a foothold in the industry and has cost advantages. Canada, on the other hand, exports airplanes, which are produced by firms with similar characteristics in Canada.

Question 9

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Possibilities for the United States and Canada }\
\begin{array} { l c c } 
\hline \text { U.S. Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 10 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 10 \
\hline \text { Canada Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 2 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 12 \
\hline
\end{array}
\end{array}$$
-(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada._____ has/have an absolute advantage in producing cars.

Accepted Answer

The answer of Use the following to answer questions :...

Question 10

Sri Lanka's comparative advantage over Canada in textiles can be explained by its:

Accepted Answer

Sri Lanka's comparative advantage in textiles is due to its labour abundance, as it has a large and relatively low-cost workforce compared to Canada.

Question 11

Both Canada and the United States produce automobiles and their components;however,each particular model or component is produced in only one of the two countries.Which factor explains this pattern of production and trade?

Accepted Answer

The answer of Both Canada and the United States produce...

Question 12

Use the following to answer questions : 
-(Figure: The Production Possibility Frontiers for Jackson and Tahoe)Use Figure: The Production Possibility Frontiers for Jackson and Tahoe.In autarky,Jackson produces and consumes 30 head of cattle and 80 kilograms of wheat,while Tahoe produces and consumes 80 head of cattle and 60 kilograms of wheat.With complete specialization according to comparative advantage,the two nations' combined production of wheat will:

Accepted Answer

With complete specialization according to comparative advantage, Jackson will specialize in producing wheat and produce all 150 kilograms of wheat while Tahoe will specialize in producing cattle and produce all 110 head of cattle. This results in an increase in combined production of wheat by 60 kilograms (150-80).

Question 13

An urbanized country has 100 million workers living on 100 square kilometres of land.A country that is principally rural has 1 million workers living on 10 square kilometres of land.From this information,we know that the urbanized country is _____ relative to the rural country.

Accepted Answer

The answer of An urbanized country has 100 million workers...

Question 14

Honduras exports clothing to Canada,and Canada exports bulldozers to Honduras.Proponents of the Heckscher-Ohlin model would explain this pattern of trade by stating that:

Accepted Answer

The Heckscher-Ohlin model explains trade patterns based on countries' relative factor endowments. In this case, Honduras has a relatively large endowment of factors of production for making clothing, while Canada has a relatively large endowment of factors of production for making bulldozers. This leads to specialization and trade between the two countries. Choices A and B do not accurately explain the trade pattern, and choice D does not apply to the given scenario.

Question 15

China,which is labour-abundant,has a comparative advantage in clothing production,which is labour-intensive.Which model explains this pattern of comparative advantage?

Accepted Answer

The answer of China,which is labour-abundant,has a comparative advantage in...

Question 16

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Possibilities for the United States and Canada }\
\begin{array} { l c c } 
\hline \text { U.S. Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 10 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 10 \
\hline \text { Canada Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 2 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 12 \
\hline
\end{array}
\end{array}$$
-(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada.Both nations can produce cars and lumber.If these nations trade,Canada has the comparative advantage in _____ and should trade _____ to the United States in exchange for _____.

Accepted Answer

Canada has the comparative advantage in lumber production, meaning it can produce lumber at a lower opportunity cost compared to cars. Therefore, Canada should trade lumber to the United States in exchange for cars.

Question 17

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Possibilities for the United States and Canada }\
\begin{array} { l c c } 
\hline \text { U.S. Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 10 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 10 \
\hline \text { Canada Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 2 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 12 \
\hline
\end{array}
\end{array}$$
-(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada.Both nations can produce cars and lumber.In _____,the opportunity cost of _____ cars is _____ board feet of lumber.

Accepted Answer

DIn option C, the opportunity cost for Canada to produce 1 million cars is 6 million board feet of lumber, indicating that for every car produced, Canada foregoes the production of 6 board feet of lumber. In option D, the specific numbers (1 million cars and 166,000 board feet of lumber) suggest a detailed calculation of opportunity cost, which could be correct depending on the specific production possibilities not provided here. However, without the table, we can't calculate exact figures, but options C and D both address the concept of opportunity cost in a plausible manner.

Question 18

Mexico is relatively labour-abundant when compared with Canada.Therefore,Mexico has a comparative advantage in _____ compared with Canada.

Accepted Answer

Since Mexico is labour-abundant, it has a comparative advantage in goods that require more labour-intensive production. Therefore, choice B is the correct answer. Choices A, C, and D do not consider the factor of labour-intensity, and therefore, cannot be the correct answer.

Question 19

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Production Possibilities for the United States and Canada }\
\begin{array} { l c c } 
\hline \text { U.S. Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 10 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 10 \
\hline \text { Canada Production Possibilities } & \text { One Possibility } & \text { Another Possibility } \
\hline \text { Quantity of Cars (millions) } & 2 & 0 \
\text { Quantity of Lumber (millions of board feet) } & 0 & 12 \
\hline
\end{array}
\end{array}$$
-(Table: Production Possibilities for the United States and Canada)Use Table: Production Possibilities for the United States and Canada._____ has/have an absolute advantage in producing lumber.

Accepted Answer

The answer of Use the following to answer questions :...

Question 20

Which statement does NOT describe a source of comparative advantage?

Accepted Answer

The statement suggests absolute advantage, not comparative advantage. Comparative advantage refers to the ability of a country to produce a certain good or service at a lower opportunity cost than another country.

Quiz 8: International Trade

Chile has a comparative advantage over Canada in copper.Which factor is a source of this comparative advantage?

Japan's comparative advantage in automobiles can be attributed to:

Which model states that nations that are abundant in a factor will have a comparative advantage in a good whose production is intensive in that factor?

If the _____ differ(s) between two countries,this suggests the possibility for mutually advantageous trade.

Bangladesh exports shirts,the making of which is labour-intensive,to Canada.The likely source of Bangladesh's comparative advantage in shirts is:

Which trade pattern is BEST explained by increasing returns?

Sri Lanka's comparative advantage over Canada in textiles can be explained by its:

Both Canada and the United States produce automobiles and their components;however,each particular model or component is produced in only one of the two countries.Which factor explains this pattern of production and trade?

An urbanized country has 100 million workers living on 100 square kilometres of land.A country that is principally rural has 1 million workers living on 10 square kilometres of land.From this information,we know that the urbanized country is _____ relative to the rural country.

Honduras exports clothing to Canada,and Canada exports bulldozers to Honduras.Proponents of the Heckscher-Ohlin model would explain this pattern of trade by stating that:

China,which is labour-abundant,has a comparative advantage in clothing production,which is labour-intensive.Which model explains this pattern of comparative advantage?

Mexico is relatively labour-abundant when compared with Canada.Therefore,Mexico has a comparative advantage in _____ compared with Canada.

Which statement does NOT describe a source of comparative advantage?